Written by In the recent case of Parkview Constructions Pty Ltd v Futuroscop Enterprises Pty Ltd [2023] NSWSC 178, the NSW Supreme Court considered a dispute between a builder (Parkview Constructions) and a principal (Futuroscop) over the date of practical completion under an AS4902 contract to construct two buildings, a hotel (Building A) and a carpark (Building B). Under an AS4902 contract, a superintendent can issue a certificate of practical completion where the works are “complete except for minor defects”.
Construction commenced in March 2016. On 12 September 2017, the superintendent issued a conditional notice of practical completion for the hotel, which expressly stated it was not a certificate of practical completion for the carpark. The superintendent then issued a conditional notice of practical completion for the carpark on 25 September 2017.
Parkview commenced proceedings after requesting a release of security on the basis that the two conditional notices constituted practical completion under the contract, which Futuroscop refused. The issue was whether practical completion was truly reached, which depended upon whether the “conditional” notices constituted effective certification of practical completion.
The Court found that the conditional certificates of practical completion were invalid and had no contractual effect. Building A and Building B also were never established as separable portions under the contract, meaning that there could only be one certificate of practical completion for both buildings. Therefore, the superintendent was not empowered to issue a conditional certificate of practical completion for one building at a time.
This decision reinforces the importance of administering contracts in accordance with its terms. It also serves as reminder that although a conditional certificate of practical completion may be commercially attractive, it has no effect under the contract.